Is The Internet On Its Way Out?
Web stocks slowing.
Investors let their guard down for the second day in a row, but it was close as an early rally attempt fizzled and for a brief period the major indices dipped into the red before a gust of wind came along and carried the day.
I still say stocks pushed oil lower and not the other way around and watching them jockey back and forth yesterday reminded me of the boxing match between Sugar Ray Leonard and Tommy Hearns. Once stocks got the upper hand oil became a felled gladiator. Just think, the notion that oil is lower because the economy is weaker is gaining traction at the same time that corporate earnings lifted the Dow almost 500 points in two days. That's odd and doesn't jive. I don't quibble with the idea of slowing demand eventually impacting crude oil but it seems disingenuous and too simple to say all of a sudden investors in oil realized the higher price was beginning to backfire.
On another note, it's kind of crazy that there's been talk of stopping investors from going long crude oil and also new action to stop traders from shorting financial companies. The invisible hand of the government isn't so invisible. On the contrary the powers that be are actually rather ham-fisted.
Yes, I do think there should be an uptick rule, but shorts should be allowed to exist. (Those that say there isn't a downtick rule to go long make a good point but the psychology of the market is such that it's easy to stoke fear and manipulate emotions with bear raids. Heck, we just had one of the best one-two sessions in the history of the market and it's doubtful anyone that was afraid or bearish changed their minds. Turn the tables and 500 points to the downside in two days could trigger riots like those seen at the Karachi Stock Exchange.)
Whatever the true reason (and I'm sure there are several) crude oil finished the day like a punch-drunk boxer, lying on the canvass when the final bell rang. It is going to be interesting to see if speculators jump from equities tomorrow and leap back into oil. If that happens how will it be covered in the media? Oil up on poor earnings results from key bellwether stocks. That just doesn't seem logical.
Crude is close to filling a large gap and if that doesn't hold look for a move lower, perhaps to $120.00.
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As for the Dow, it's been a nice rebound but the index tickled its 20-day moving average (which could potentially be a huge resistance point), and the down trend line is still intact. The inability to clear this hurdle would be a red flag. Just look at the last couple of times rallies failed at the 20-day moving average. In May and June the 20-day moving average proved not only impenetrable but failure only made matters worse.
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Is The Internet Dead Already?
I spent the weekend with some of the smartest techies on the planet, guys and gals from all over the world: They drank the Kool-Aid a long time ago. By the time I got back to New York I was ready to get with it and stop living in the Stone Age (I still don't even have a Facebook page). But if the Internet has so much growth potential and will eventually displace everything including television, then why are the stocks associated with the information highway system limping along at a snail's pace or have curled up like armadillos? Internet stocks haven't been world beaters for a long time and right now the Internet Holders (HHH) is at a 52-week double bottom and vulnerable to the four year low of 44.0.
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After the bell Google (GOOG) posted earnings that missed the consensus estimate. I think the company's goal of being aloof or standoffish with respect to Wall Street is really backfiring. The company has now missed the consensus estimate in three of the last five quarters. Posting $4.63 the company missed by a dime as research spending surged 65%. For some time the company has been chided for hiring too many people that essentially fiddle all day long.
This might be a great inducement to get eggheads to sign on the dotted line but when there are shareholders looking for results (a little different than great ideas in skull sessions) it might be smart to restrict indoor skateboarding and maybe lay down goals to actually produce stuff. Perhaps nothing did more to send the shares swooning in the after-market than comments from the CEO that this is a "challenging economic environment."
But the Internet is blowing up... What gives and why do all the stocks in the space look so horrendous? According to Cisco (CSCO), the growth of IP traffic will be nothing short of out-of-this-world.
I don't get it and to be honest I'm just a little frustrated with the newest crop of hot tech stocks biting the dust.
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